H2H Associates, LLC v. Blue Waters Dredging LLC et al

Filing 156

Chief Judge F. Dennis Saylor, IV: MEMORANDUM AND ORDER ON SECOND MOTION FOR JUDGMENT OF DEFAULT AGAINST DOROTHY WILLIAMS (Halley, Taylor)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
__________________________________________
)
RICHARD HISERT, Manager,
)
on behalf of H2H ASSOCIATES, LLC,
)
)
Plaintiff,
)
)
v.
)
)
BLUE WATERS DREDGING LLC,
)
DAVID URBANI, HERBERT HASCHEN,
)
and DOROTHY B. WILLIAMS,
)
)
Defendants.
)
__________________________________________)

Civil Action No.
16-11960-FDS

MEMORANDUM AND ORDER ON SECOND MOTION
FOR JUDGMENT OF DEFAULT AGAINST DOROTHY WILLIAMS
SAYLOR, C.J.
This action arises out of a contract dispute concerning a marine dredging project. In July
2015, the Army Corps of Engineers awarded H2H Associates, LLC a contract for a dredging
project in Cohasset, Massachusetts. H2H subcontracted with Blue Waters Dredging LLC
(“BWD”) to perform work on that project. According to H2H, BWD fraudulently induced H2H
to make payments to it by submitting false lien waivers and then abandoned the job.
H2H brought suit against BWD and its members, including Herbert Haschen and
Dorothy Williams. A default was entered against defendant Dorothy Williams on July 31, 2019.
The case against defendant Herbert Haschen went to trial, and on August 8, 2019, the jury found
him liable for $148,626. H2H now seeks a default judgment against Williams pursuant to Fed.
R. Civ. P. 55(b)(1) in the amount of $342,309.38. For the following reasons, the motion will be
granted.

I.

Background
A.

Factual Background

The evidence and testimony presented at trial established the following facts.
1.

The Dredging Job

On July 13, 2015, the Army Corps of Engineers awarded H2H a contract to dredge
Cohasset Harbor in Massachusetts. On August 27, 2015, H2H subcontracted with BWD to
provide all “labors, materials, equipment and services” necessary to dredge the harbor for a price
of $1,194,611.
BWD was a limited liability company organized under Maryland law. During the
relevant period, BWD had three members: Herbert Haschen and Dorothy Williams, who each
owned a 40% share of the company, and David Urbani, who owned the remaining 20%.
In early October 2015, after the job was scheduled to be started, BWD had not yet
obtained a necessary dredging booster pump. To begin the project, Haschen told H2H that BWD
needed to lease a pump from another company in Long Island, but that BWD would need
advance funding from H2H to be able to do so. In response, H2H transferred BWD $70,000.
From November 2015 through February 2016, BWD continued to insist that it needed
funds to operate prior to the completion of significant work on the dredging job. H2H made
various payments to BWD over that time period, believing that it was doing so to help BWD
cover expenses and continue to operate. In total, H2H transferred to BWD a total of
$947,774.07. BWD did not complete the project, causing significant losses to H2H.
2.

The Lien Waivers

On seven occasions during the course of the project, BWD completed and submitted
“Partial Lien Waiver[s]” that certified that BWD had paid all subcontractors and vendors in

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connection with the dredging job. H2H made payments to BWD in reliance on the submission
of the lien waivers. Six of the seven partial lien waivers were signed by Williams; the other was
signed by Haschen. The sum of the transfers made by H2H in response to the six lien waivers
signed by Williams was $706,866.42. All were fraudulent, because vendors and subcontractors
had not in fact been paid.
B.

Procedural Background

On September 29, 2016, H2H filed this action. An amended complaint was filed on
March 8, 2017. Although defendant Dorothy Williams filed a letter in response to the original
complaint—which the court deemed to be an answer—she did not respond to the amended
complaint. On July 31, 2019, the court entered a default against her.
A jury trial against defendant Haschen concluded on August 8, 2019, with a finding for
H2H in the amount of $148,626.1
On August 20, 2019, H2H moved for a default judgment against Williams pursuant to
Fed. R. Civ. P. 55(b)(1) for $706,866.42.
On September 13, 2019, the Court denied that motion on the ground that the damages
asserted were not a “sum certain” under Rule 55(b)(1). Instead, the Court concluded that
“[p]laintiff will have to establish, by affidavit or otherwise, the amount of its damages pursuant
to Rule 55(b)(2) before a default judgment may enter.” (See Sept. 13, 2019 Memorandum and
Order, Dkt. 153 at 5).
On September 23, 2019, plaintiff filed a renewed motion for default judgment against
Williams. That motion, which was also filed pursuant to Rule 55(b)(1), includes affidavits and
exhibits and sought a default judgment in the amount of $342,309.38.

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Summary judgment in favor of Urbani was granted on November 16, 2018. (See November 16, 2018
Memorandum and Order, Dkt. 100).

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II.

Legal Standard
When a defendant has defaulted and the judgment amount is not a sum certain under Fed.

R. Civ. P. 55(b)(1), “the party must apply to the court for a default judgment.” Fed. R. Civ. P.
55(b)(2). In determining whether a default judgment is appropriate, “the court may conduct
hearings or make referrals . . . when, to enter a or effectuate judgment, it needs to: (A) conduct
an accounting; (B) determine the amount of damages; (C) establish the truth of any allegation by
evidence; or (D) investigate any other matter.” Id.
A defendant that has defaulted is “taken to have conceded the truth of the factual
allegations in the complaint as establishing the grounds for liability as to which damages will be
calculated.” Ortiz–Gonzalez v. Fonovisa, 277 F.3d 59, 62–63 (1st Cir. 2002) (internal quotations
omitted). In other words, a “default judgment on the well-pleaded allegations in [a] complaint
establishe[s] only [the] defendant's liability.” Eisler v. Stritzler, 535 F.2d 148, 153 (1st Cir.
1976). “Those allegations relating to the amount of damages, however, are not taken as true.”
Rodriguez v. Craig, No. 91–10665–RWZ, 1994 WL 561999, at *2 (D. Mass. Sept. 29, 1994)
(citations omitted); see also KPS Assocs., Inc. v. Designs by FMC, Inc., 318 F.3d 1, 19 (1st Cir.
2003); Century ML–Cable Corp. v. Carrillo Diaz, 39 F. Supp. 2d 121, 123 (D.P.R. 1999).
Therefore, the plaintiff has the burden of establishing the amount of damages it is entitled to
recover. See, e.g., Eisler v. Stritzler, 535 F.2d at 153–54; G. & C. Merriam Co. v. Webster
Dictionary Co., Inc., 639 F.2d 29, 34 n. 7 (1st Cir. 1980).
A trial judge has “considerable latitude in determining the amount of damages.” Jones v.
Winnepesaukee Reality, 990 F.2d 1, 4 (1st Cir. 1993). Where the evidence is sufficient or the
“district court [is] intimately familiar with the case,” a plaintiff’s damages amount may be
determined without the holding of an evidentiary hearing on the matter. KPS & Assoc. v.

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Designs by FMC, Inc., 318 F.3d 1, 21 (1st Cir. 2003).
III.

Analysis
For the following reasons, plaintiff’s motion for a default judgment against Dorothy

Williams in the amount of $342,309.38 will be granted. However, Haschen and Williams will
not be held jointly and severally liable for the respective judgments entered against them.
A.

The Amount of Default Damages Against Williams

At the outset, plaintiff’s motion will be construed as having been brought under Rule
55(b)(2). Although plaintiff has again insisted that he is entitled to damages under Rule 55(b)(1)
for a “sum certain,” the fact that he has requested a different damages figure than in his previous
motion underscores the Court’s reasoning in its September 13, 2019 Memorandum and Order. In
any event, plaintiff has included evidence in the form of exhibits and affidavits with his most
recent motion. For that reason, the Court will consider the motion under Rule 55(b)(2).
Taking the factual allegations in the complaint against Williams as true, the plaintiff has
carried his burden of establishing damages against her in the amount of $342,309.38. The
evidence has primarily come in the form of an affidavit from Richard Hisert. He asserts that
H2H paid several of BWD’s sub-contractors $342,309.38, when it had already paid that amount
to BWD in response to William’s fraudulent lien waivers. (Hisert Aff. ¶¶ 8-10). The affidavit is
supported by the lien waivers themselves and a spreadsheet of payments to BWD subcontractors.
(See id. Ex. A; Ex. 2). Evidence introduced at Haschen’s trial concerning the nature of H2H and
BWD’s contractual relationship further reinforces the damages figure claimed by plaintiff.
Taken as a whole, the evidence establishes that Williams’ fraudulent conduct caused H2H
damages of $342,309.38.
Defendant Haschen, who was found liable for $148,626 at trial, contests the amount of

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the damages for two reasons.2 First, Haschen has submitted an affidavit from Dorothy Williams,
the defaulting defendant, stating that she is “unsure as to the basis for the ‘final negotiated
amount paid by H2H,’ what invoices, if any, were satisfied by that payment, the dates of those
invoices, or the date and nature of the service allegedly rendered by the subcontractor.”
(Williams Aff. ¶ 6). The affidavit further states that she “disagree[s] that H2H has shown that
the amount requested [] logically or necessarily follows from the vague and unclear information
presented by H2H to the Court.” (Id. ¶ 7). But as a defaulting defendant, the facts as alleged by
plaintiff against Williams must be taken as true. Furthermore, and in any event, neither she nor
Haschen offer any specific evidence to the contrary. As is often the case with complex
construction contract suits, this case presents issues of partial completion, partial payments, and
muddled sources and uses of funds that make a perfect calculation impossible. See, e.g., George
Hyman Const. Co. v. Gateman, 16 F. Supp. 2d 129, 132–48 (D. Mass. 1998).
Second, Haschen argues that the damages for which Williams should be responsible were
decided by the jury in his trial. As discussed below, Haschen’s trial explicitly addressed only his
own fraudulent acts; the jury was specifically instructed not to consider Williams’ conduct. And
again, the factual allegations against Williams must be taken as true in light of her default; that
means that she is responsible for the execution of numerous false lien waivers for which Haschen
was not directly implicated.
Accordingly, the amount of damages assessed against Dorothy Williams will be
$342,309.38.
B.

Whether Liability Among the Co-Defendants Should Be Joint and Several

Under Massachusetts law, tortfeasors are held jointly and severally liable for damages

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The Court will assume that Haschen has standing to contest the motion, based on the possibility that he
may be found jointly and severally liable for the fraud perpetrated by Williams.

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when they are jointly responsible for the harm. Joseph W. Glannon, LIABILITY OF MULTIPLE
TORTFEASORS IN MASSACHUSETTS, 85 MASS. L. REV. 50, 51 (2000); see also O’Connor v.
Raymark Indus., Inc., 401 Mass. 586, 591–2 (1988). Tortfeasors are considered joint if “two or
more wrongdoers [] contribute to the [] injury of another by their several acts, which operate
concurrently, so that in effect the damages suffered are rendered inseparable . . . .” O’Connor,
401 Mass. at 591 (quoting Chase v. Roy, 363 Mass. 402, 408 (1973)). The SJC has noted that
this test is not limited to negligent acts. O’Connor, 401 Mass. at 591 (“[A] defendant's position
is no better if the concurring acts of others were not negligent acts.”).
As noted, Haschen was found liable by the jury in the amount of approximately
$148,000, and Williams has been found liable by default in the amount of approximately
$342,000. If Haschen and Williams are joint tortfeasors, the inconsistency in the amounts gives
rise to a variety of problems. For example, if the court awards a default judgment against
Williams in the amount of $342,000, and finds Haschen jointly and severally liable for that
amount, it would be unfair to Haschen. In substance, the trial (and the jury verdict) would have
been a pointless exercise, because he would wind up in the same position as if he himself had
defaulted. But if the court reduces the default judgment against Williams to the amount of
$148,000, and finds her jointly and severally liable for that amount, it would unfairly reward
Williams. In substance, she would be in a better position for defaulting than if she had appeared
and defended the case.
Under the circumstances, Williams and Haschen should not be found liable as joint
tortfeasors, but rather as individuals perpetrating separate acts of fraud. To begin, that is the
theory of the case that plaintiff pursued at trial. Plaintiff prosecuted the case at trial against
Haschen as an individual tortfeasor who committed an act of fraud that was separate from the

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acts perpetrated by Williams. (See, e.g., P. Proposed Jury Inst. No. 1, Dkt. 134; Amend. Joint
Pre-Trial Mem. 8-9, Dkt. 119). As a consequence, the Court gave the following instruction to
the jury:
This lawsuit is against Herbert Haschen personally. It is not against Blue Waters
Dredging, LLC, David Urbani, or Dorothy Williams. There is evidence from
which you could conclude that the Blue Waters Dredging, LLC and H2H
Associates, LLC, had a contract for the performance of certain work, and that
Blue Waters Dredging, LLC breached that contract. This is not, however, a claim
for breach of contract against Blue Waters Dredging, LLC; there is only one
claim, for fraud, against one defendant, Herbert Haschen. Herbert Haschen,
individually, can be held responsible for his own conduct, but he cannot be held
personally responsible for the debts and obligations of Blue Waters Dredging,
LLC or any other person or company.
Although neither plaintiff nor Haschen requested that specific instruction, plaintiff’s proposed
instructions focused solely on Haschen’s conduct. (See P. Prop. Jury Inst., Dkt. 134). If the
theory of the case was that Haschen and Williams committed a single, unitary scheme to defraud,
for which they should both be held jointly and severally liable, the trial would have been
conducted, and the jury would have been instructed, in a different fashion.
A somewhat analogous situation was presented in GEICO v. Parkway Medical Care,
P.C., 2017 WL 1133282, *14–16 (E.D.N.Y. Feb. 1, 2017). Defendants had participated in an
insurance-fraud scheme in which various licensed healthcare professionals incorporated sham
medical corporations to submit fraudulent insurance-reimbursement claims. Id. *3–4. In
untangling the fraud, the court considered the roles of the various parties, particularly in the
apportionment of liability among defaulting defendants. Id. at *14–16. The court held that
defendants related to the central corporate entity were jointly and severally liable for all
damages, but the medical professionals were each liable only for damages attributable to their
submissions. Id. GEICO had failed to prove that each doctor “acted jointly with one another”
and that its injuries were “indivisible.” Id.; see also Allstate Ins. Co. v. Nazarov, 2015 WL
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5774459 (E.D.N.Y. Sept. 30, 2015) (holding various sub-groups of defendants jointly and
severally liable, but not for the full damages, in similar insurance-fraud scheme); see generally
Angelo Iafrate Cons., LLC. v. Potashnick Const., Inc., 370 F.3d 715, 722 (8th Cir. 2004)
(“Parties are not similarly situated and a default judgment does not establish inconsistent
judgments, however, if the liability of the defaulting party is based on independent wrongful acts
or a legal theory distinct from the one under which the answering party prevailed.”).
Here, Williams’ fraudulent conduct involved the execution of six falsified lien waivers
that induced distributions from H2H. Haschen’s fraudulent conduct involved the execution of a
different lien waiver inducing a different distribution. Although the conduct was all funneled
through BWD, the fraudulent acts, and associated damages, of each defendant were distinct. As
in GEICO, plaintiff has not shown that defendants acted with one another, and he certainly has
not shown an indivisible injury.
Finally, the Court notes that there is an internal inconsistency in plaintiff’s position. If
the fraudulent acts of Williams and Haschen were part of a unitary scheme producing indivisible
damages, then the jury verdict against Haschen would necessarily be the total of plaintiff’s
damages. Instead, plaintiff argues that Williams caused separate damages than Haschen, but also
that both defendants should be jointly and severally liable. That tension is not addressed in the
briefing, and plaintiff cannot have it both ways. Because joint tortfeasors produce indivisible
damages, it is not possible that Williams’ caused distinct damages than Haschen and that she and
Haschen are joint tortfeasors.
In short, Williams and Haschen conducted separate acts of fraud that produced distinct
damages. Accordingly, defendants will not be held jointly and severally liable for the damages
caused by the other.

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IV.

Conclusion
For the foregoing reasons, plaintiff’s motion for a default judgment against Dorothy

Williams in the amount of $342,309.38 is GRANTED. Defendants Herbert Haschen and
Dorothy Williams will not be held jointly and severally liable for the obligations of each other.
So Ordered.
/s/ F. Dennis Saylor IV
F. Dennis Saylor IV
Chief Judge, United States District Court

Dated: January 21, 2020

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